Spain readies system of flexible energy use in peak hours

MADRID (Reuters) - Spain will create a system allowing energy-intensive companies to disconnect from the grid for up to three hours a day during peak usage in exchange for compensation amid the European energy crisis, Energy Minister Teresa Ribera said on Tuesday.

Industry Minister Reyes Maroto said on Monday the government could resort to forced power cuts for such companies this winter, but it was not necessary for the moment.

Under the proposed system announced by Ribera, however, power-intensive industries, such as steel- or tile-making, could themselves opt to cut or reduce energy usage for a maximum of three hours with a 15-minute warning.

"This offers flexibility to the system and therefore reduces demand during peak hours," Ribera told a news conference after a cabinet meeting.

She also said that a previously-announced cut in value-added tax on gas to 5% from 21% from next month and until the end of the year, aimed to soften the impact of surging gas prices on household utility bills, could be extended further if need be.

Following the disruption in Russian natural gas supplies after the invasion of Ukraine and subsequent sanctions against Russia, many European countries are facing potential gas shortages that would also affect electricity generated by gas-fired power plants during the winter.

(Reporting by Christina Thykjaer, editing by Andrei Khalip and David Evans)